2009 (8) TMI 64 - HC - Central Excise

Constitutional validity Section 9D - Relevancy of statements under certain circumstances - violation of principles of natural justice - The moot question that arises is as to whether the provision in question is arbitrary. Such a provision can still be held to be offending Article 14 of the Constitution and can be termed as arbitrary if it is established that the provision gives uncanalised and uncontrolled power to the quasi judicial authorities Held that - the provisions of Section 9-D (2) of the Act are not unconstitutional or ultra vires; - while invoking Section 9-D of the Act, the concerned authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; - such an opinion has to be supported with reasons; - before arriving at this opinion, the authority would give opportunity to the affected party to make submissions - affected party ca challenge the invocation of provisions of Sec. 9-D of the Act in a particular case by filing statutory appeal, which provides for judicial review.

Issues Involved:
1. Constitutional validity of Section 9-D of the Central Excise and Salt Act, 1944.
2. Interpretation and application of Section 9-D in quasi-judicial proceedings.
3. Violation of principles of natural justice due to denial of cross-examination.
4. The necessity and adequacy of safeguards in Section 9-D.

Issue-Wise Detailed Analysis:

1. Constitutional Validity of Section 9-D:
The primary issue in these writ petitions was the constitutional validity of Section 9-D of the Central Excise and Salt Act, 1944. The petitioners argued that Section 9-D(2) conferred uncontrolled, unguided, and unfettered powers upon Central Excise Officers, violating Article 14 of the Constitution. They contended that the provision lacked necessary safeguards, conditions, guidelines, and restrictions, making it arbitrary. However, the court held that Section 9-D is not unconstitutional or ultra vires. It noted that similar provisions exist in other statutes, such as Section 32 of the Indian Evidence Act, and have not been found unconstitutional. The court emphasized that the power to rely on statements without cross-examination under certain exceptional circumstances is justified and necessary to ensure that proceedings do not continue indefinitely.

2. Interpretation and Application of Section 9-D:
Section 9-D provides for the relevancy of statements made before a Central Excise Officer of gazetted rank during an inquiry or proceeding under the Act. Such statements can be used to prove the truth of the facts contained therein under specific circumstances, such as when the person who made the statement is dead, cannot be found, is incapable of giving evidence, is kept out of the way by the adverse party, or when their presence cannot be obtained without unreasonable delay or expense. The court held that these circumstances are exceptional and beyond the control of the parties, justifying the reliance on such statements without cross-examination.

3. Violation of Principles of Natural Justice:
The petitioners argued that the denial of cross-examination violated the principles of natural justice. They contended that the right to cross-examine witnesses is a crucial facet of natural justice, especially in quasi-judicial proceedings that can have severe consequences. The court acknowledged the importance of cross-examination but noted that under certain exceptional circumstances, this right could be taken away. The court emphasized that the provision itself includes safeguards, such as the requirement for the quasi-judicial authority to form an opinion based on material on record and to provide reasons for its decision. Additionally, the affected party has the opportunity to challenge the invocation of Section 9-D through statutory appeals.

4. Necessity and Adequacy of Safeguards in Section 9-D:
The petitioners argued that Section 9-D lacked adequate safeguards to prevent arbitrary exercise of power by Central Excise Officers. They suggested that prior intimation and an opportunity to make submissions on the applicability of Section 9-D should be provided to the assessee. The court, however, held that the safeguards are inherent in the provision itself. The quasi-judicial authority must form an opinion based on sufficient material on record and provide reasons for its decision. The court also noted that the affected party has the right to challenge the decision through statutory appeals, ensuring judicial review.

Conclusion:
The court concluded that Section 9-D of the Central Excise and Salt Act, 1944, is not unconstitutional or ultra vires. It held that while the provision allows for statements to be relied upon without cross-examination under certain exceptional circumstances, it includes inherent safeguards to prevent arbitrary exercise of power. The court emphasized that the quasi-judicial authority must provide reasons for its decision and that the affected party has the right to challenge the invocation of Section 9-D through statutory appeals. The writ petitions were dismissed, and the court found no merit in the challenge to the vires of the provision.

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